Contracts Week 3

Conditions and the Power of Acceptance from Section 36 example

bike business offers 3-hour bike rentals for $1 for the first 10 customers on saturday. if you are the 11th customer you cannot accept the offer because you failed to fulfill the condition.

Restatement (2d) 42 Revocation by Communication From Offeror Received by Offeree

An offeree’s power of acceptance is terminated when the offeree receives (no mailbox rule) from the offeror a manifestation of an intention not to enter into the proposed contract.

Restatement (2d) 43 Indirect Communication of Revocation

An offeree’s power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect.

Mirror Image Rule

When an acceptance differs from the offer, that purported acceptances becomes a counteroffer. Aka The Last Shot Rule

Normile v Miller

a counteroffer acts as a rejection of the original offer, and the original offeror can revoke the counteroffer at any time before it is accepted, meaning an original time limit for acceptance in the rejected offer doesn't automatically bind the counterofferor unless explicitly stated in the new terms. A seller's sale of property to a third party effectively revokes a prior counteroffer, terminating the potential buyer's power to accept it later, even if within the original timeframe. 

Sub Judice

decisions that are under consideration by a judge or court

Agreements Under Seal

a formal contract, traditionally marked with wax but now often by the word "SEAL" or "L.S." (locus sigilli) near the signature, that historically created a strong presumption of consideration, allowing for longer statutes of limitations, though many states now treat them like regular contracts. 

A Fortiori

a situation in which if one thing is true then it can be inferred another thing is even more certainly true.

UCC 2-205 Firm Offers

an offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event my such period of irrevocability exceed 3 months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

Restatement (2d) 45 Option Contract Created by Part Performance or Tender

(1) where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tends or begins the invited performance or tenders a beginning of it.

** the offeree must notify the offeror that they have begun

(2) the offeror’s duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer.

Cook v. Coldwell Banker

an offer for a unilateral contract (like a bonus for performance) becomes irrevocable once the offeree begins substantial performance, meaning the offeror cannot withdraw the offer even if full performance isn't completed, as the offeree's action supplies the necessary acceptance and consideration. 

Restatement (2d) 63 Time When Acceptance Takes Effect (Mailbox Rule)

Unless the offer provides otherwise,

(a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree’s possession, without regard to whether it ever reaches the offeror; but

(b) an acceptance under an option contract is not operative until received by the offeror

Restatement (2d) 66 Acceptance Must Be Properly Dispatched

An acceptance sent by mail or otherwise from a distance is not operative when dispatched, unless it is properly addressed and such other precautions taken as are ordinarily observed to insure safe transmission of similar messages.

UETA 15. Time and Place of Sending and Receipt

• When a Record is "Sent": An electronic record is considered sent when it is properly addressed, in a format usable by the recipient's system, and enters a system outside the sender's control or a part of the recipient's system.

• When a Record is "Received": A record is received when it enters the recipient's designated system in a processable form. This occurs even if no person is aware of its arrival.

• Place of Sending and Receipt: Unless agreed otherwise, records are considered sent and received at the parties' places of business. If there are multiple business locations, the one most related to the transaction is used. If a party has no business location, their primary residence is the default location. 

Key Considerations:

• These rules are the default and can be overridden by agreement between the parties.

• Section 15 deals with delivery, not whether the record is legally effective or usable.

• As of 2026, the UETA has been widely adopted across the U.S., with New York being the only exception, using its own ESRA. 

Nowlin v Nationstar Mortgage

a valid loan modification agreement was established when borrowers met the lender's defined terms, such as mailing signed documents via an authorized method and making required payments, regardless of the lender later stating the paperwork was missing

Ardente v Horan

an acceptance to a contract offer must be definite and unequivocal, and if the offeree adds conditions or new terms (like requesting additional items), it operates as a rejection and a counteroffer, not an acceptance, thus preventing a contract from forming unless the offeror accepts the new terms

Princess Cruises v Norfolk Shipbuilding

for mixed contracts involving goods and services in admiralty, courts must first determine if the contract's predominant purpose is goods or services, applying Uniform Commercial Code (UCC) rules for goods contracts or common law for services, rather than automatically applying UCC principles to all maritime contracts just because they involve a ship, as service contracts are governed by admiralty common law. 

Consequential Damages

losses that do not flow directly and immediately from a breach of contract but result from the secondary consequences or results of that breach

Implied Warranties

UCC 2 implies warranties into contracts for the sale of goods.

Restatement (2d) 71 Requirement of Exchange

(1) to constitute consideration, a performance or a return promise must be bargained for.

(2) a performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.

Hamer v. Sidway

giving up a legal right (forbearance) at someone's request, even if it provides no tangible benefit to the promisor, is sufficient legal consideration to make a promise enforceable in contract law. 

Carlisle v T&R Excavating

a contract requires bargained-for consideration to be binding, and a conditional gratuitous promise or one supported by past consideration is not legally enforceable

Past Consideration

A past promise or act that forms the basis for a future promise. Not sufficient to make an agreement legally binding.

Restatement (2d) 79 Adequacy of Consideration; Mutuality of Obligation

If the requirement of consideration is met, there is no additional requirement of

(a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; or

(b) equivalence in the values exchanged; or

( c ) “mutuality of obligation”

Pennsy Supply v American Ash Recycling

a promise can be legally binding as a contract if the promisor receives a benefit (like avoiding disposal costs) and the promisee incurs a legal detriment (like taking the material), establishing "reciprocal conventional inducement," even without explicit bargaining over price, thus meeting the bargain theory of consideration. 

Davis v Joseph Magnolia Inc

an arbitration agreement in an employee manual is unenforceable for lack of consideration if the employer retains the unilateral right to modify or revoke policies at its sole discretion, rendering its promise to arbitrate illusory. 

Wood v Lucy, Lady Duff-Gordon

in exclusive dealings contracts, a promise to use reasonable efforts to generate profits is implied, even if not explicitly stated, because the agreement's context and shared benefit necessitate such a duty for the contract to be meaningful. This means an acceptance of an exclusive agency implies an obligation to work diligently to make it successful, preventing one party from benefiting without performing

Doughty v Idaho Frozen Foods

a commercial contract is not unconscionable or lacking mutuality of obligation simply because its negotiated terms, in hindsight, result in a disadvantageous outcome for one party due to an inherent allocation of market or production risks. 

What is the time limit for an offeror to revoke an offer?

Until the offeree has accepted (mailbox rule). Once the offeree has accepted (or dispatched acceptance into mailbox) the offeror can no longer revoke.

Partial performance by offeree in a unilateral contract

makes unilateral contracts irrevocable by offeror. but offeree can still bow out and until he has completed the performance he has not technically “accepted.”

gift giving

not consideration. not legally binding.

bargained-for

both parties mutually induce each other

exception to mirror image rule

if the offeree accepts but adds an additional term, usually that would be a counteroffer. But if the offeror then begins performance (like painting someone’s house after thye initially offered to paint it for $1000) that is a tacit acceptance of the counteroffer by performance.